15 Money Management Hacks You Must Know
We’ve seen the savings hacks that make a whole lot of ‘cents’ (see what we did there!). Money jars for loose coins, saving $5 notes for a year, biscuit tins filled with $2 coins – the list is as long as our imagination.
And to a certain extent, they work!
While these tips are helpful for building incidental savings though, it’s the big-ticket ideas that have the biggest impact on long-term financial wellbeing. We’ve found 15 money management strategies that will help get you started on the path to financial success.
Budget like a pro
1. Don’t live from pay to pay
We get it, it feels insurmountable when you’re in it. But if you’re surviving by living this way, then you can survive by NOT living this way. A few really strict months is all you need to break this cycle and then you can start to build for the future. More tips on those ‘strict months’ coming right up….
2. Build a buffer
Life happens so make sure you have easily accessible funds to deal with unexpected expenses. Cars break down, jobs are lost – having an ‘emergency fund’ to cover financial crises takes away the stress while providing security when you need it most. Six months’ worth of living expenses is the suggested goal. It’s a case of taking what you started; breaking the month-to-month cycle, using our Tip 1, and then continuing with it for a few months longer.
3. Make a budget
Unless you create a plan, your money will always find a way to spend itself. It might be boring, or even confronting, but it works - so stop putting it off!
Start by reviewing your monthly income, expenses and financial goals, write a plan stripping out expenses where you can, and then start doing it. Remember to review regularly or when your situation changes. Use a budget tracking tool or app and don’t forget to include savings and debt reduction goals in your budget. Don’t just nod at this as you’re reading it, go and do it!
4. Apply the 50/30/20 Rule
As a rule of thumb, keep 50% of your income aside for essential expenses, 30% for your ‘wants’ and 20% for savings or paying off your debt. Nice and simple isn’t it? If that feels impossible, then aim for 60/30/10 or whatever is manageable in current circumstances - then change the ratio as things improve. But try to stick to it!
Money management at your fingertips
5. Use finance apps
There are some great finance apps to help with budgeting, saving and keeping track of your spending - think of it as a financial planner in your pocket. In addition to the apps provided by major lenders, here are some popular ones to help you budget and save:
- Splitwise – an easy tool for splitting bills with friends and keeping track of payments.
- Easyshare – a payments app that splits payments and bills in a shared household.
- MoneyTree – a savings tool that collects analyses and displays all your financial data and loyalty points.
- ATO – a tool for all things tax related including lodging and tracking returns with access to ATO tools and calculators.
6. Try using cash day-to-day
Try using cash every so often. You’ll quickly see how much you spend and on what - a near empty wallet can be a very sobering sight, especially if it’s mid-week.
Put some structure around it by working out how much you’ll need for discretionary spending then withdrawing that exact amount of cash, as it can be easy to lose track when you’re not directly handing over cash. See how using cash works for you and who knows, it might be your wake-up call on where you can make savings and how you can put the brakes on incidental spending.
Be a savings expert
The further away a goal seems, the more likely we are to give up. Having a realistic and achievable savings plan that focuses on big goals with bite-sized goals along the way is a great way to get the results you want. Don’t let savings be an afterthought, set up a savings system and get into good savings habits now. But be warned - savings are addictive!
7. Open a separate account for your savings
We know, we know, this is a no-brainer, but if you see money in your everyday account you will spend it. Fact. Fast track your savings by setting up a dedicated savings account. Look for products that pay high interest and even penalise for withdrawals. Yes, this is getting serious.
8. Automate your savings
You won’t miss the money if you never see it. Setting up an automatic payment so a portion of your weekly pay goes directly into your savings account is a simple and effective way of growing your savings without the pain or temptation. We all know how to do it, the trick is, how do you leave the money there and not raid it when you’re desperate. If you get a savings account with restricted access, then you’ll only take in REAL emergencies, not on a whim.
Get set for debt destruction
9. Love your loan
For many, taking out a personal loan is essential – you may need a new car, car repairs (sigh) or have other major expenses that you need help paying for. Used responsibly, personal loans can be a valuable tool. They may have lower interest rates than credit cards and have a repayment schedule, which means your debt comes with an end date.
The key to successfully repaying personal loans is to have a considered and sensible approach to managing debt. You need to be as careful with your debt as you are with the car you’ve just bought.
The faster you can repay your loan, the less it will actually cost you. Look for low interest personal loans with features that allow you to make extra repayments. This means any financial windfalls like work bonuses, birthday money and tax refunds can go straight into your personal loan. By reducing the amount you owe, you’ll also reduce the amount of interest calculated on your outstanding balance – a double win! Keep an eye out for any early termination fees though.
Take the time to shop around for the best rates and fees. It’s worth it in the long run, when you have the right product.
10. Consolidate your loans
Debt consolidation offers a fresh start and helps you restructure your debts and clear them faster. By putting all your payments into a single personal loan, you can manage your debt and you may save in interest costs too, as personal loan interest rates are typically lower than that of credit cards. Having an end date to be debt-free is a good incentive and it’s a relief not to have a financial burden hanging over you.
11. Credit cards can be your friend or your enemy
It depends whether you treat them with the respect they deserve - which means repaying your balance in full each month if possible. Too many people simply make the minimum monthly repayments, then continue racking up debt and get stuck in a debt cycle with no end date in sight. Look for credit card options like the Latitude Gem Visa that offers some fantastic payment plans.
Remember if you have a credit card, try to repay the balance in full each month. This is not a drill, people.
Stealth Saving for your future
12. Manage your future smarter
NOW is the time to be planning for your future, whatever age you are.
To start, work out how much money you need to ensure you’ll have the lifestyle you want in later years.
Make sure you’re saving the maximum you can every month for the long term future, without making things miserable now.
13. Save money on bills
Why spend more than you need to on bills – go through each bill and look at ways to save – you’ll be surprised at how much you can reduce them. Remember if you don’t ask you don’t get. Be the person who gets.
- Mobile Phone Plans – the mobile phone industry is very competitive so keep looking and asking for the best deal.
- Car Insurance – bundle together all your insurances and look for discounted rates.
14. Care for your credit profile
A credit profile is used by lenders to assess your creditworthiness and is made up of your credit score and your credit report which is generated from your credit history. Every time you apply for a personal loan or a credit card, this registers on your credit history. Repeatedly applying for credit can have a negative effect on your credit score. When a lender looks at your credit profile and sees you already have debt exposure and repeat applications, they may consider you a higher credit risk.
15. Buy property when it’s right for you - but early is good
The biggest challenge and goal is to get a toehold in the property market. The earlier you buy, the better off you’ll be, and even more so by buying a house with land rather than a unit as it has more potential to appreciate. But don’t buy for the sake of it, make sure it’s an ongoing affordable situation and that you have a decent deposit for the right place.
But wait, there’s more financial help…
If this has got you excited, then check out some more saving and budgeting tips on Latitude’s Life Done Better pages…